The Uganda shilling tumbled in the early part of the week threatening to breach a key psychological level of 3400 but recouped some losses mid week on account of interbank selling and end month flows.
The money market remained very liquid with significant amounts in excess of 900 billion outstanding in repos with the Central Bank.
In the government securities market, Bank Of Uganda offered Ugx. 195 billion in treasury bills but accepted more than the amount on offer. Yields edged up slightly to trade at 14.778%, 16.079% and 16.364% for 91,182 and 364 day respectively.
In the international currency markets, the US Dollar remained on the flat line as investors digested the chances of a US rate hike as early as June. A rate rise would draw investors to dollar denominated assets, lifting the US dollar and sinking emerging and frontier market currencies.
‘ ‘Outlook for the shilling indicate bearish momentum building up ahead of the budget statement for fiscal year 2016/2017.’’ Says Stephen Kaboyo, the Alpha Capital Markets Boss
He adds: Another factor that is likely to exacerbate price action at this period is dividend payments by corporate players.